Meeting of the Parliament 30 January 2025
I am grateful to the Deputy Presiding Officer for giving me permission to leave the debate early in order to attend a business event. I apologise to members, because that means that I will miss some contributions in this important debate.
Scotland’s economy, like that in the rest of the UK, has seen a sustained period of low growth and low productivity against a backdrop of rising costs in recent years. When the First Minister assumed office in May, he said that economic growth would be a priority for his Government. Effectively supporting Scotland’s businesses will be key to delivering that ambition.
The Economy and Fair Work Committee’s pre-budget scrutiny had a particular focus on our enterprise agencies, the Scottish National Investment Bank and VisitScotland, which together account for the majority of the spend that our committee scrutinises.
That economic development landscape has been described as cluttered, and the committee has heard repeated calls for a more seamless and focused support mechanism for businesses that still recognises the distinctive needs of different sectors, businesses of different sizes and different parts of Scotland. We know that the Withers review recommended that enterprise agencies should take responsibility for supporting businesses with skills and workforce planning, which will require those agencies to broaden their approaches. The committee notes that that will be considered as part of the reform programme for post-school education and skills and intends to take evidence shortly that will feed into that.
In our pre-budget letter to the Government, we sought further clarity about its wider plans to reform the economic development landscape. Although the Government outlined its three broad priorities, there was no detail about reform, such as progress to date, future plans, expected timelines or measurable outcomes. At a time of challenging budgets and growing demand, delivering public sector reform has never been more important.
It was also clear from the evidence that we took that concerns remain about funding for the current model, with a 30 per cent real-terms reduction in Scottish Enterprise resource budgets in the past two years. In evidence to the committee, the agency made clear that it might have to consider
“stopping doing some things that we are legally obliged to do”.—[Official Report, Economy and Fair Work Committee, 25 September 2024; c 25.]
The committee also heard concerns about reductions in capital funding for our enterprise agencies and for the Scottish National Investment Bank in recent years, and about the fact that short-term funding decisions had caused uncertainty and hampered some of their work.
Funding reductions for VisitScotland in recent years led to a strategic change programme that included disposal of the iCentre network, ending the quality assurance schemes for tourism and business events, and pivoting towards a digital first approach. VisitScotland has also had to scale back activity in growth markets to focus on core markets. We know how vital tourism is to Scotland’s economy and that the Scottish Government has identified sustainable tourism as a growth sector.
Our hospitality sector is a key part of that tourism offer. The UK budget provided 40 per cent business rates relief to retail, hospitality and leisure businesses across the rest of the UK, which resulted in £147 million in consequentials for Scotland. In recent years, the Scottish Government has chosen not to pass those consequentials on to retail, hospitality and leisure businesses, and the Economy and Fair Work Committee has repeatedly heard that those sectors feel that they are now at a competitive disadvantage in Scotland, compared with the rest of the UK.